Independent Dealers

Three Ways to Reinvent the Road to the Sale and Improve Gross Profits

When I came up in the car business, I was taught the 10-step “Road to the Sale.”

As most dealers know, this traditional sales method assesses a customer’s needs, builds rapport and highlights the features and benefits of a specific vehicle. It purposefully forestalls any discussion of price until you’ve come back from a test drive to complete the final steps of a sale.

For me, the Road to the Sale methodology was a powerful and profitable way to sell cars. Like other dealers, I became very adept at steering customer conversations away from price — and talking about it only when I was ready to present the numbers. This approach played to the lack of pricing transparency and predominance of pencil-sharp negotiations at dealerships in the 1980s and early 1990s.

But times have changed. Today’s buyers are better-informed about vehicle prices and they are less willing to dance as dealers follow the Road to the Sale and avoid talking price. To them, a salesperson’s efforts to play coy about price, especially when it’s posted and promoted online, undermine the rapport and trust necessary to close the deal.

This new reality is driving some dealers to reinvent the Road to the Sale at their stores. Instead of saving price discussions to the final stages of a car deal, they address a vehicle’s pricing up front. The dialogue goes something like this:

Salesperson:

“Thank you for coming in today, Mr. Smith. We’ve got the 2010 Nissan Altima you wanted to see outside and ready for a test drive. Before we head out, I’d like to share a little information about our prices. We don’t mark up our cars like other dealers, and offer big discounts. We price our cars to be competitive, which I’m sure you noticed in your research online.

“After we test drive the car, I’ll share a market survey report that shows how we priced the car. We’ll also review the CARFAX report and the work we did in our service department to get the Altima in tip-top shape for you. I’m confident you’ll agree this car is a great value and a great ride. Here are the keys; let’s go take it for spin.”

This revised Road to the Sale is helping dealers hold gross by proactively acknowledging the time and effort a customer undertook to find the car and putting them at ease about the unit’s asking price. In this way, there’s no disconnect between the pricing transparency many dealers offer online but do not provide in their showrooms as they follow the traditional Road to the Sale.

Will customers push back on price? Some will and some won’t, dealers say. A Midwest Chevrolet dealer says some customers will ask for a better price, but “roll over and that’s the end of it” when shown comparisons with competing vehicles available in the market.

This dynamic echoes recent industry surveys that suggest 20 percent of used vehicle buyers care most about getting the lowest price on their car, while the remaining roughly 80 percent of buyers want to know they have the right car, the right price and the right dealer.

The following are three steps to help you reinvent the Road to the Sale and hold gross at your dealership:

1. Price your cars to the market.

This step ensures your used vehicles are in the market and on the money in the eyes of today’s online vehicle shoppers. This can be a challenging step for many dealers who mark cars up $3,000 to $4,000 irrespective of prevailing retail prices for the same and similar vehicles.

2. Validate your asking prices.

The key here is offering legitimate comparisons between the price on your vehicle and others like it in the market. The comparisons should highlight differences in equipment, color, options, mileage and other characteristics that affirm and justify why your asking price represents a better deal than the available car down the street. Note: In some cases, the key differentiators might relate more to your dealership and the positive customer experience you offer than the car itself.

3. Monitor deal discounts.

The traditional Road to the Sale has a problematic side effect that dealers continue to battle—it conditions some salespeople to reflexively offer discounts when customer conversations turn to price. The reinvented “Road to the Sale” helps curb this reflex, and some dealers are going a step further to minimize discounts. The fix: Monitor the average discounts by salesperson to minimize their drag on front-end gross profits. This effort, coupled with ongoing training, helps dealers consistently cut average discounts from $500 or more per car to less than $250.